2008 (6) TMI 356 - HC - Companies Law

Transfer of shares - Power to refuse registration and appeal against refusal - Held that - The interest of the mother and the sister are taken care of by the Company Law Board and direction issued to the company to transfer the shares of the deceased Thomas in the name of the respondent is legal for the reasons that the interest of the company and also any other person is taken care of by directing the respondent to see that public notice is published in the local newspaper where the first appellant company is situated inviting either objections or claim from interested persons in respect of the shares sought to be transferred in his name. The same has been published inviting the objections, if any, to the claims in respect of transfer of shares in question by the company. It is stated by the respondent s counsel that the public notice was published on 11-12-2007 and so far, neither objections nor counter-claim is received from any interested person. In the absence of the same, direction was issued to the respondent by the Board to execute the indemnity bond in the company s favour to transfer the shares in his name. We are in respectful agreement with the order passed by the Company Law Board and the appeal filed by the appellants does not call for our interference. Hence, the appeal is devoid of merits and is, accordingly, dismissed.

Summary

Issues:
Challenge to order of Company Law Board directing registration of transmission of shares, validity of Will for transfer of shares, interpretation of relevant provisions of Companies Act.

Analysis:
The judgment in question pertains to an appeal challenging the order of the Company Law Board directing the registration of transmission of shares in the name of the respondent within 30 days. The appellants contended that the order was not a speaking order and did not reject the claim for transfer of shares as per section 108 of the Companies Act. They argued that the deceased's Will did not mention the transfer of shares to the respondent, requiring a succession certificate. The respondent, on the other hand, justified the order citing section 111(5) of the Act and claimed that the company did not dispute the relationship between the respondent and the deceased. The Board considered the interest of the company and third parties, directing the transfer of shares after publishing a notice in a local newspaper and obtaining an indemnity bond from the respondent.

The Court examined the provisions of sections 111(5) and 108 of the Companies Act along with regulation 26 of the Regulations. Despite the cryptic nature of the order, the Board's decision was found to be in line with the law. The Will indicated a division of the deceased's properties among family members, including shares, without explicit mention. Affidavits from the deceased's wife and daughter relinquishing rights to the shares supported the transfer to the respondent. The Board's direction ensured the interests of all parties by requiring a public notice for objections or claims regarding the share transfer, which was duly published. As no objections were received, the respondent was instructed to execute an indemnity bond for the transfer, safeguarding the company and interested parties. The Court upheld the Board's decision, dismissing the appeal on grounds of meritlessness.

In conclusion, the judgment upholds the Company Law Board's order for the transmission of shares, emphasizing compliance with legal provisions, protection of interests, and adherence to due process through public notice and indemnity bond requirements.